The S-Word

Fri, 2012-09-21 18:07

Rockwell Collins is formally calculating the impact that the congressionally-induced budget penalty known as sequestration will have on its bottom line next year – about 5% on its business with the U.S. government.

“Government Systems fiscal year 2013 revenue is expected to decrease by approximately 10 percent, with about half of the year over year decline resulting from the impact of sequestration,” the company said in a Sept. 21 statement. “The remaining decline is primarily driven by a $100 million reduction to revenue from certain programs completing the development phase and expected to begin full scale production beyond 2013.”

Company president Clay Jones is vowing “swift and appropriate action” to continue growth for shareholders. “These actions include a restructuring charge in the fourth quarter of fiscal year 2012 to position us for improved performance in 2013 and beyond.”

Byron Callan of Capital Alpha Partners is describing the statement as the “first instance of a public defense contractor including sequestration in formal guidance.”

He says the decline from fiscal 2012 “sounds about right,” because of the company’s reliance on products for defense. “Services sales should see a higher rate of decline, though [war spending accounts] may be shielded.”